President's budget proposal may freeze ag spending

Farmers who have been waiting for the other shoe to drop on the administration's deficit reduction plans won't have to wait much longer. The president will submit his fiscal 2006 budget shortly after his inauguration on Jan. 20, and the early line isn't very encouraging.

One congressional aide is being quoted as saying the administration will propose a freeze on spending for agriculture, housing and veterans programs as part of the president's goal of cutting the budget deficit in half by 2009.

“Absolute freeze,” William Hoagland, an aide to Senate Majority Leader Bill Frist, told reporters for Congress Daily PM. “That's the signal I'm picking up. It's going to be a challenge and one of the toughest budgets I've seen on the discretionary side in a couple of decades.”

While the devil will be in the details, observers say that with commodities prices falling below the loan rate and pushing farm program costs higher, any talk about a freeze does not bode well for farmers.

Hoagland, staff director for the Senate Budget Committee before joining Frist's staff, said he believes farm payments will be reduced, and he mentioned those two words that strike fear in the hearts of cotton and rice producers: payment limits.

“It would not be surprising if agriculture support programs are in for significant budget restraints,” noted Hoagland, who based his comments on meetings with House and Senate Republican leaders and Office of Management and Budget Director Josh Bolton.

In earlier speeches, President Bush said he wants to increase spending on defense and homeland security. With mandatory entitlement programs now making up 55 percent of the federal budget and the interest payments on the federal debt taking another chunk, the remaining 18 percent of the federal budget will have to absorb the shock of the freeze.

American Farm Bureau Federation President Bob Stallman has already begun noting that agriculture spending accounts for less than 1 percent of the federal budget.

Nevertheless, farm payments make a convenient target, especially when many members of Congress believe farmers don't need them given 2003's high prices and last year's record-breaking crops.

Iowa Sen. Charles Grassley, a leading proponent of tighter payment limits, says the latter could save $1.3 billion a year in farm program outlays. His comments came during successful confirmation hearings for Nebraska Gov. Mike Johanns.

Before the president nominated Johanns to be secretary of agriculture, speculation arose that several candidates had turned down the offer because of looming cuts in farm program spending. Former Congressman Charles Stenholm confirmed that conjecture in an interview, saying he wasn't a viable candidate because he would not have supported such decreases. “I had tremendous support in the country but no support from the administration,” he said.

Almost every major farm organization supported the president's re-election bid. If those groups want to protect the gains they fought for in the 2002 farm bill, it may be time to start calling in their chips.